In a new article, Bitter Pill: Why Medical Bills Are Killing Us, Time Magazine delves into why medical bills are so high. 

I had a fibrous cyst creating a boil on my neck several years ago. After a round of antibiotics, a doctor performed a 15 minute outpatient surgery, assisted by a nurse, in an examination room. It wasn't even an operating room. Local anesthetic was used. The incision was about 3/4", and I was given a prescription for Vicodin I really didn't need before I left. 

The bill was about $850. I was shocked. I might have expected $250, but $850?

Well, $850 is nothing in today's medical world. 

Time describes instances of non-life threatening household accident injuries that run up bills in the five figures. More serious problems like treating cancer can run up bills in the six- and seven-figure range with ridiculous line items described in excruciating detail in the article.

What makes the pain of high healthcare costs worse is that the health care providers seem to be profiteering with markups that are as outrageous as they are unjustified. So-called "nonprofit" hospitals are actually profit-making institutions. Have you noticed how your local hospital is adding on new additions like crazy while the rest of the economy is slow. It's a boom economy in healthcare, forcing unjustifiable costs on a public suffering in a totally separate economy.

The article argues something I've already written about here: the healthcare industry isn't a normal market and doesn't really operate in the normal economy the rest of us have to live in. It doesn't compete for the business it gets and there's very little operating to restrain their costs. Yes, your insurance company probably gets a discount of 40%-50%, but even with that discount it's hard to justify the line items on the bills. 

Of course, there are people who can't pay their bills and become write-offs and they become part of the high cost of healthcare, but not such a large part that bills need to be as high as they are. Likewise, insuring themselves against lawsuits filed by people who can't accept that (a) shit happens or that (b) some people's conditions are terminal no matter WHAT care they get is a costly problem.

Putting some controls on the legal problems the industry faces is an obvious need, and one that can be addressed. However, the reasons for high healthcare have mostly to do with greed—getting whatever the traffic will bear—rather than providing the best service possible at a reaonable price. It's an industry that has forgotten that its primary purpose is to provide a service, not to break the back of those it serves with unjustifiably high expenses.

Look, I like capitalism, but I've come to decide that there are places where capitalism doesn't work. We don't want police and fire departments, libraries, and parks to be run on a "what the market will bear" basis. I would think that we especially don't want our healthcare system run that way.

You have no better argument for socializing medicine than the system we have now.

Tags: care, health

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"We keep our rates the lowest in the industry. How do we do it? We pay the fewest claims!"

Why do you like capitalism? It is a short cut to progress and promotes competition, but at what human cost? Is the cost close to the same as religions cost on humanity? And are we so sure it's the only way to get those results? What are some alternatives never tried? right now the markets (money) informs everything on the limit we should invest. the govt prints money, then takes back the money they print in taxes to pay for services, entitlements, and defense. yes that an over simplification. all of which they say is dictated by free market rates, cost of living, and inflation/deflation. but really without a govt backing the debt on the money, it means nothing. so market restrictions that some complain about are always there. Here is where healthcare comes in. research how much money oncology and heart clinics make for insurance co, doctors, and hospitals. track the market at work there, with little restrictions. Look where the public thinks the research money is and they think should be going, and look at what most scientist socialized medicine countries that are mostly publicly finded think it should go. When the market says keeping those WITH disease alive as long as possible is more profitable then preventing the diseases to begin with, the human suffereing gets clearer.

Why do I like capitalism? I'll consider alternatives that reward individual effort and innovation. I think capitalism does that better than the alternatives. However, health care isn't a normal market and it's not clear that capitalism works there.

@Unseen

I tend to feel the same way as you about capitalism, although I've been rethinking those feelings recently.  One problem I see with capitalism is that it ignores the need to reward labour.  I used to think capitalism was great because it meant anyone could put up a shingle and sell their services - although the system has become so capital-centric that small businesses, which predominantly sell labour much more directly, are getting crushed.  I think there needs to be some sort of balance between capital and labour in order for an economic system to maintain innovation.

If labor was paid according to worth (which its not) what worth does a wall street investor have? When the banker controls how much he is worth they are going to make sure and say they are worth the most. If there is no level playing field then any discovery will have an arbitrary value placed on it by someone not qualified to make that evaluation.  

Labour tends to be paid according to it's value within the market.  Skilled labour tends to be paid more than manual labour, and the hard worker tends to be paid more than the slacker.

I'm in agreement about the banksters though - I have no idea how they work out billion dollar compensation packages even when managing failing companies.

The playing field is definitely not level - which is what I was referencing when talking about the need for balance between capital and labour rewards.

The playing field is definitely not level - which is what I was referencing when talking about the need for balance between capital and labour rewards.

For added perspective on the concepts of work and reward, consider the factors of inheritance and class mobility. The paydays of the poor and middle classes really are based on the work they do. The paydays of the wealthy are based on the accident of their births.

A child born to wealthy parentage will almost certainly be a wealthy adult. A child born to middle class parentage will likely grow up to have a middle class income. A child born to poor parents will likely grow up to be poor.  

The reward you get has more to do with who your parents are than with the work you do. The aristocracy lives.

"Some people are born on third base and go through life thinking they hit a triple." -Barry Switzer

Yes, well it seems that social mobility is a strong indicator of hard work - within the middle class and heavily restricted to those born into the middle class.  That was enough to keep people pretty happy for the last 60 years.  The trouble is that the aristocracy, through their capital, are now pressing that middle class into a thinner and thinner margin just above the upper limits of poverty.

The paydays of the wealthy are based on the accident of their births.

While I agree with your post, one thing worries me about this line of thinking. I want to be able to leave something for my kids when I die (I'd like for my parents to leave me with an inheritance, too). Don't you? How can we say that inheritance is not fair? Would it be more fair to say that any wealth you die with is forfeited to the state? I just don't feel that way.

While I agree with your post, one thing worries me about this line of thinking. I want to be able to leave something for my kids when I die (I'd like for my parents to leave me with an inheritance, too). Don't you? How can we say that inheritance is not fair? Would it be more fair to say that any wealth you die with is forfeited to the state? I just don't feel that way.

I only mean to dispel a misconception that capitalism is based on the concept that reward is based primarily on work. While there is a grain of truth to that, it's generally overlooked that our reward and station in life is based on who our parents were. 

What should we do about it? Should we do anything about it at all? Is there a better system? I don't know, Stutz. What do you think?

@Stutz

Leaving money for your children shouldn't be a problem.  The problem comes when capital gains are taxed at 5% and labour earnings are taxed at 20% or more.  A person should be able to contribute to retirement through labour, and then be able to shield that retirement income from high taxes during retirement - but when you inherit huge amounts with hardly any estate tax and then pay next to nothing on revenues from that capital all your life while those working for a living are taxed through the nose it's just not fair.

I often wonder what the real tax rate is when one considers that as a dollar circulates, the government tax a sizeable cut at almost every turn. 

Say I do a job earning me a $1000 profit and I pay $250 in taxes. I turn around and pay someone to work on my car and he makes a $1000 profit and pays $250 in taxes. He pays someone to design a website for him and that person makes a $1000 profit and pays $250 in taxes. He then needs some physical therapy and pays the therapist a fee resulting in a $1000 profit resulting in $250 in taxes. 

The government gets many bites at the apple and yet why are taxes so high?

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